Fed rate cut expectations shift to October following strong US jobs data By Investing.com

Investing.com — The release of strong US payrolls data has prompted traders to adjust their expectations for the next Federal Reserve rate cut, according to the data compiled by Bloomberg. The next rate cut is now projected to occur just once in 2025 and as late as October.

This is a significant shift from earlier in the week when traders were considering a potential rate reduction in June or July.

Recent jobs figures provide a clearer picture of the labor market, free of any distortions caused by weather or strikes.

These numbers support the notion that the US economy is progressively less reliant on monetary policy support.

The U.S. economy saw an addition of 256,000 jobs, and the unemployment rate slightly decreased, according to the Labor Department’s Friday announcement.

December’s increase in nonfarm payrolls surpassed economists’ expectations of 155,000 jobs, as per a Wall Street Journal survey. The unemployment rate of 4.1% also outperformed the anticipated 4.2%.

These results indicate a recovery in the U.S. labor market from its midyear dip, with potential signs of accelerating momentum.

Average hourly earnings also experienced growth, rising 0.3% from November to $35.69. This represents a 3.9% increase from December 2023.

Following the release of the employment report, stock futures fell sharply as the robust jobs figures are likely to solidify the Federal Reserve’s strategy to decelerate the frequency of interest-rate cuts in the upcoming months.